The Natural Oil and Gas Suppliers Association of Nigeria, NOGASA, has warned that Dangote Petroleum Refinery's plan to bypass established distribution channels and supply refined petroleum products directly to end-users will cause nationwide disruption, long-term product scarcity, and supply network collapse. Oil and gas providers urged the refinery to reassess its plan and seek additional talks before distributing goods to end consumers, calling on them to learn from Nigerian National Petroleum Company Limited-managed non-functional refineries.
During its annual conference meeting, the leader of the NOGASA, Bennett Okorie, has called on President Tinubu to intervene in the matter, insisting that Dangote alone cannot handle nationwide distribution of the product.
Reacting, an official of the Dangote refinery described the position of the dealers as anti-Nigeria, arguing that the plan by Dangote was to remove the cost of logistics in the movement of petrol products nationwide.
However, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, said Nigerians should not rejoice yet over the announcement by the Dangote refinery, as he backed the sister oil marketing group, NOGASA.
The fracas has led to a spike in the depot price of the product from N815 to N870 on Wednesday.
Recall the Dangote refinery had recently disclosed plans to deploy 4,000 new Compressed Natural Gas-powered (CNG) tankers for nationwide distribution of petrol and diesel directly to marketers, manufacturers, telecom firms, aviation companies, and other large consumers, as opposed to the traditional middlemen.
Accordingly, the refinery took delivery of the said 4,000 new CNG-powered trucks and is set to be launched come August 15th by the Dangote group. The initiative, which is believed will provide more efficient transportation across Nigeria and beyond, has been applauded by some industry experts. With the investment of N720bn, the initiative is expected to save Nigerians over N1.7tn annually and lift 42 million Micro, small, and medium enterprises by reducing energy costs and enhancing profitability.
The refinery explained that the move is part of its broader strategic program to eliminate logistics costs, enhance energy efficiency, promote sustainability, and support Nigeria’s economic development.
Reacting, Korie said if existing retail outlets were forced out of business due to Dangote’s direct distribution approach, the supply chain would be disrupted in the event of any disruption at the refinery.
He further added that handling refining, distribution, and retail through filling stations as a single entity is unsustainable, citing the failed attempt by the Nigerian National Petroleum Company Limited at direct distribution. He stated that the state-owned refineries began to decline after the oil company ventured into retail distribution.
“We are pleading that Mr President should intervene in this matter by telling Dangote to slow down and go by the rules of the game. Nobody’s against the refinery. If there’s anybody who supported Dangote Refinery more than any other organisation, it is its association.
“But when this issue came up, we said, no, we need to advise; we need to give you an idea how to go about it. What is important to us is that the refinery is blending, the product is coming out, and Nigerians are enjoying the product that is blended today.
“Now, some Nigerians will be thinking maybe because we don’t want him to do this or because of competition. No, it is because we don’t want what happened to NNPCL to happen to Dangote Refinery. The reason is that, before now, NNPC refined products and distributed them through their subsidiary at that time.
“And everything was moving smoothly; it wasn’t bad. Until people who I think advised Dangote today went to advise NNPC to start doing distribution directly, which is the filling station that you have in NNPC filling stations. As soon as this NNPC filling station started, that was when our refinery started going down,” Korie said, warning that the same fate could befall Dangote’s $20bn refinery if it follows a similar path.
Korie stressed that while the association fully supports the operations of the Dangote refinery, the decision to bypass traditional distributors poses a serious threat to their survival, and it’s the same venture that led to the decline of the NNPCL.
He warned that handling refining, distribution, and retail through filling stations as a single entity is unsustainable. “Because they were concentrating on their filling stations. I am not saying they are not paying attention to refineries, but you can’t do it alone. You are blending, you are refining, and at the same time operating, and again, add a filling station in your operation.
“We don’t need to pretend that we don’t know what’s going to happen. Because many of us are clapping hands, one company wants to refine, one company wants to stock, one company wants to do the logistics of distribution, and one company wants to fix prices. So that one company is going to be both a businessman and a regulator. And so many Nigerians don’t seem to understand the dynamics of the difficulty,” he said.
Reflecting on what happened in the cement industry, he said, “Because I want to draw your attention to the fact that we also have similar situations in our cement industry, where you are seeing the same trucks supplying cement.
“So, I’m sure you have seen in all your homes and villages and cities those small, small container shops that are for cement. So, where the cement is not produced from the factory and also distributed to those very critical distribution centres, have you bought cement for N115 again? From N115, we are buying now for 10,000 plus,” he said.
He raised concerns over what he described as Dangote’s attempt to dominate the market, noting that retail outlet operators are losing as much as N80 per litre due to sudden price adjustments.
“You will have a problem. That is why today you have this problem of our refineries not working. So because of this, we now say, No, please don’t go there. Concentrate on this thing you are doing. You are doing well. You are finding the product good; sell to the marketers, and the marketers sell to the end users. Remove your hand from this direct distribution. It will bring you problems, and once you start solving that problem, you will not have time to fix the refinery or operate the refineries very well.
